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Empty condos and foreign investors: Sign of the times or synonyms for racism?

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This past week newspapers reported on Vancouver’s high number of empty condos. The reports were based on new research by Andy Yan of BTAworks. Yan is known for an earlier 2009 study that used BC Hydro statistics to track the number of empty condos in downtown Vancouver. Yan’s new research essentially confirms the 2009 study: as of 2012 Vancouver has an average of 7.7 per cent empty condo units, with an exception for downtown’s Coal Harbour, at 23 per cent empty.

Many of the empty units in the ultra-luxury towers of Coal Harbour are seasonal homes and secondary suites for Canada’s high net worth elite. Canada’s tax cuts have unleashed billions of dollars into luxury real-estate near to home. After ten years of neoliberal reforms since the election of the BC Liberals in 2001, an unprecedented amount of wealth has been freed up for circulation and reinvestment in British Columbia. Profit rates have soared while the corporate income tax rate in B.C. has been reduced from 16.5 to the current 10 per cent. Today the upper 20 per cent of B.C. pay a lower total provincial tax rate than the remaining 80 per cent, and the provincial government now collects more revenues from a regressive sales taxes than from income tax.

Since the election of Gregor Robertson and Vision Vancouver, the city has boasted the lowest corporate tax rate in the world, combined with millions in targeted tax breaks, subsidies, and fee exemptions for local billionaires. In each of the next four years, corporate profits in B.C. are projected to continue climbing and reach $31.3 billion in the year 2015 alone. Over the course of three decades, billions of dollars of surplus capital have produced flat wages, growing inequality and bloated financial markets. Is there a lot of freed-up capital moving into Vancouver’s speculative real-estate economy? Certainly.

For those who are raking in on Vancouver’s boom, it is easier to frame the housing crisis with “foreigners,” and there is no surprise that journalists have insisted on misrepresenting Yan’s research. Some editors have decided to step miles beyond Yan’s actual findings. A Vancouver Observer heading reads, “Foreign investment in real estate market resulting in empty condos,” and despite the Coal Harbour exception, journalists have used the 23 per cent statistic as shorthand for the city at large. One inaccurate headline states blatantly: “Nearly a quarter of Vancouver’s condos are empty.” (An article by Frances Bula, which rightly focuses on investor ownership, opens with lines that are characteristically misleading for average readers: “Nearly a quarter of condos in Vancouver are empty or occupied by non-residents…” The sentence continues with a tacked-on caveat about “some areas of downtown.”)

So it might come as a surprise to learn that no part of Yan’s research establishes or even implies a link between empty condos and foreign investment. One of Yan’s most significant findings is that a majority of property assessments for Vancouver condos are sent to investors living in the Lower Mainland. Almost all landlords and property investors are local residents, a majority of them holding primary residence in West-side neighborhoods like Point Grey and Shaughnessy. Yan found that a full 96 per cent of the assessments were sent within Canada and the rest to the United States; only 0.8 per cent were sent to addresses in China and Hong Kong combined. The upshot of this research, according to Yan, is the need to “take out the foreign and talk about the impacts of investment.”

Some claim that the property assessments are being sent to corporations based in Vancouver and forwarded overseas, but yet the number of assessments sent to management firms (2 per cent) and the “firm/strata” category (6 per cent) is a small minority — the rest were sent to individuals in the Lower Mainland. Yan’s basic finding is consistent with Bob Rennie’s industry research sent out yearly to his clients. The key to Vancouver’s market, Rennie states, is a historic shift away from the West half of the city towards new centres of speculation. West-side homeowners currently sit on $88 billion of leveragable clear-title housing stock, and homeowners are unsurprisingly using their properties to leverage the banks and move their children east. (Rennie continues: “They’re going to start spreading the wealth and helping their kids while they’re still alive because their kids can’t do it without them. That’s going to be a lot of money that’s going to move around the region.”) This thesis was confirmed in an important PIVOT report on the gentrification of Mount Pleasant, which found that the (predominantly Asian) community surrounding Main and Broadway is in the process of being displaced by white yuppies (young urban professionals) from west of Granville. Simply put, property owners -- or rather their offspring -- are moving east on the backs of overleveraged mortgages. (Overleveraging occurs frequently through “remortgaging,” whereby one mortgage is use to borrow money for a second mortgage. Current household debt in Canada has risen to new heights, reaching 163 per cent.)

While Yan’s research gives no evidence for a link between foreign investment and empty condos, it does reveal the extent to which Vancouver condos are investor-owned rather than owner-occupied. According to BC Assessment statistics, 52 per cent of condos are investor owned. For smaller units the proportion of investor owned (rather than owner occupied) is even higher, at 62 per cent. In his presentation at SFU, Yan stressed the extent to which this finding brings into question assumptions of a one-to-one link between smallness and affordability. But again, nothing in the research points to a connection between foreign investment and empty condos. Yan’s findings were released at an SFU forum on “Foreign Investment in Vancouver’s Real Estate Market,” and in order to hear an argument in favor of the popular “foreigner thesis,” one would have to skip Yan and listen to the other speakers on the panel, like Sandy Garossino and Jim Sutherland.

It first has to be acknowledged that comments by Garossino and Sutherland exist in a larger context, not a vacuum. If we listen to the people worst affected by racism, the situation is worsening and today there is a palpable feeling of rising anti-Chinese racism in Canada, recently voiced by members of the Chinese community. According to Bill Chu, “the dislike of Chinese people has only lain dormant and is apparently being roused by recent events.” Earlier this month a mob of 1,000 residents asserted their “Canadian identity” by calling on Richmond politicians to reduce the number of Chinese-language signs in the city. This month immigrants are being rounded up in raids by the Canadian Border Service, producing a culture of fear for people deemed “illegal” by Canada’s -- and Vancouver’s -- expanding police apparatus.

Many people felt that the SFU event on foreign investment was “long overdue.” According to this perspective, Vancouver’s politicians and researchers have been dragging their feet in their “duty” to put a numerical value on the amount of foreign investment injected yearly into Vancouver’s housing market. This has long been the position of Sandy Garossino, whose main approach is to claim “agnosticism” about the impacts of foreign investment while continually expressing “concern about foreign Chinese buyers in Vancouver.” This convenient two-way position allows Garossino to ride the wave of populist sentiment while inserting a minimal distance between herself and the worst representatives of populism and foreigner scapegoating.

Sutherland, who can be positioned somewhere between Garossino and Mark Hasiuk, used his speech at the SFU event to perpetuate the lie that in Vancouver “we don’t get refugees and poor immigrants, we only get a high end of immigrant.” Not only is Vancouver a place for refugees -- when they arrive they are forced to pay more than half of their income to live in overcrowded housing. From listening to Sutherland one would not know, furthermore, that Vancouverites living in poverty are mostly people of colour, more than half of whom speak Chinese as a first language (54 per cent). Like Garossino, Sutherland began his talk declaring his agnosticism about the effects of immigration on the local economy before moving headlong into monologue about the one-to-one link between immigration and unaffordability. At times Sutherland took on somber tones and his talk bordered on racist conspiracy, declaring at one point that “the media has been very complicit in all of this.”

So why is the “foreigner thesis” so popular among Vancouver’s political elite? One answer is that it allows the government to get away with its anti-affordable housing policies. Property-owning elites such as Mayor Robertson continually go on record to “lament wealthy immigrants making ‘green’ city unaffordable.” Why? Because it allows Vision Vancouver to serve the rich, displace the poor and deregulate the housing market without any consequences. In the face of an unprecedented housing crisis, Vision has passed ten policies to make the situation worse and zero to improve it. But when criticized for the crisis, the same political elites lean on scapegoating, citing “global forces” that are simply beyond their control.

Downtown’s empty condos are sitting only blocks away from the homeless shelters scheduled to close next month. The decision to shut down hundreds of shelter beds comes as yet another callous move in the celebrated “tight bond” between Vision Vancouver and the BC Liberals (Mike Howell, “Mayor, housing minister build tight bond,” The Vancouver Courier, June 10, 2010). Still, few have taken notice as the housing crisis worsens. Affordable neighborhoods like Mount Pleasant and Chinatown are not being renovicted by the abstract forces of global capital, but by a municipal-developer alliance that tailors city policy to the needs of profit-making -- doing so with pin-point accuracy. Each eviction in our city is associated with a specific municipal policy, not with a person of colour or an immigrant. Planners channel the developers into the poorest and most affordable areas because that’s where profit margins are the highest. And why would Vision Vancouver care about maximizing the profit margins? Because the developers fund the entire corrupt game, that’s why.

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